Impact of Online Chats on Consumers New to a Market: A Learning Model

Xing Fang, Purdue University

Abstract

The first essay ”Impact of online chats on consumers new to a market: a learning model”. The authors study purchase behaviors of consumers new to the baby formula market when uncertainty about baby formula quality is resolved through two sources of information: information acquired by consumers online chats and product usages. The authors use a unique data set containing individual online chat information which is previously unobserved as active learning source. Using a Bayesian learning model, they provide evidence that models without active learning would overestimate the learning process of produce usages. Consumers who use online chats would get extra information to resolve their uncertainty and tend to spend more compared to consumers who do not. The active learning is more prominent when their needs change exogenously. The results are empirically useful that firms could utilize online chat to resolve consumers uncertainty and target consumers whose need might change periodically. ^ The second essay ” Targeted referral: values of social media data”. Referral program has become a common CRM tool to acquire new customers and retain existing customers for online retailers. Compared to traditional customer acquisition methods, referral programs are more cost-effective. A successful referral relies on the social connectedness of customers. Due to the unavailability of social network data, very few previous studies leverage such social network information to design targeted referral programs. In this paper, we use a unique data set containing transaction panel and customers’ social media information to provide insights on how to better target customers for successful referrals. We are the first paper to extend referral program literature by using social media data. Our results provide a useful framework to gather social media information to improve referral programs.^

Degree

Ph.D.

Advisors

Manohar Kalwani, Purdue University.

Subject Area

Business administration|Marketing

COinS